This S&P/ASX 200 Index (ASX: XJO) healthcare share has been one of the most dramatic movers on the market. In the past month, Mesoblast Ltd (ASX: MSB) shares have surged 20% to $2.73 at the time of writing.
Over the last 12 months, the S&P/ASX 200 Healthcare Index (ASX: XHJ) share has gained a whopping 64%. By comparison, the ASX 200 Healthcare Index has lost more than 22% over the same period.
Is this it for Mesoblast, or is there more to come?
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Commercial inflammatory treatment
After spending years in the doldrums, the share price of the regenerative-medicine company has roared back to life. The rally has been driven largely by renewed optimism surrounding Mesoblast's lead therapy, remestemcel-L.
The company aims to commercialise a suite of therapies treating inflammatory and immune-based diseases, drawing on a platform that has taken years to develop.
The ASX 200 healthcare share price is climbing sharply as the company edges closer to long-awaited regulatory breakthroughs in the US. If it lands approval from the US Food and Drug Administration (FDA) in the coming months, it would unlock its first major commercial revenue stream.
FDA-approval crucial hurdle
This might be the milestone that fundamentally reshapes the company's financial profile. Investors have been watching closely as the company resubmits clinical data to the FDA — the final hurdle that has tripped Mesoblast more than once in the past.
Each step forward in the regulatory process has pushed the ASX 200 healthcare share higher. Momentum traders have piled in, betting that this time the company may finally secure the approval it has been chasing for over a decade.
Burning serious capital
But the ASX healthcare share story is not without risk. Mesoblast's business has always been a high-stakes, high-reward proposition, and that hasn't changed.
The company has burned through significant capital over the years, repeatedly raising funds to support prolonged clinical trials and regulatory processes. Mesoblast's history of FDA setbacks — including multiple requests for additional data — has also weighed on investor trust.
Commercialisation risk remains high. Even if the company secures approval, it must still build sustainable sales and compete with emerging cell-therapy rivals.
What do brokers think?
Despite the uncertainty and the risks, brokers seem to be optimistic about Mesoblast's chances this time around. Many analysts see the ASX 200 healthcare share as a buy, with plenty of upside.
The average 12-month price target for the stock is $4.25, a possible gain of 56% at the time of writing.
The team at Securities Vault is also positive and has named Mesoblast as a buy.
It highlights that the biotech company's commercialisation strategy is progressing and its development pipeline is strong.
It noted:
The company holds a strong cash position of about $US145 million and offers flexibility via a $US50 million convertible note facility to fund the next growth phase. Company commercialisation is progressing and MSB has generated a pipeline of depth.
